H&M's Q3 sales fall but profit rises due to cost cuts

Swedish fashion group Hennes & Mauritz AB (H&M) experienced a decline in sales in the third quarter of the 2024/25 financial year. The company did, however, manage to significantly increase its profit. This was announced in a business report published on Thursday by the parent company of brands such as H&M, Cos, Monki, Weekday, & Other Stories and Arket.

In the period from June to August, group sales amounted to 57 billion Swedish kronor. This represents a 3 percent decrease compared to the same quarter last year. Revenue increased by 2 percent in local currencies.

Negative currency effects impact sales development

In Western Europe, by far the group's most important market region, quarterly sales rose by 1 percent to 19.9 billion Swedish kronor. This represents an increase of 3 percent in local currencies. In the Nordic countries, sales decreased by 1 percent to 5.2 billion Swedish kronor, remaining roughly stable in local currencies.

In Asia, Oceania and Africa, revenue totalled around 6.4 billion Swedish kronor, down 10 percent on the corresponding prior-year level. This was a 2 percent decrease in local currencies. In the Americas, sales shrank by 8 percent to 12.1 billion Swedish kronor, which was a 1 percent increase in local currencies.

In Eastern Europe, sales of 5.4 billion Swedish kronor were roughly on par with the same period last year, growing by 3 percent in local currencies. In Southern Europe, the group recorded a 4 percent decline to 7.9 billion Swedish kronor, an increase of 3 percent in local currencies.

Cost reductions lead to strong profit growth

Despite the decline in sales, the fashion retailer was able to significantly improve its results. The gross margin increased from 51.1 to 52.9 percent compared to the same period last year, despite slightly higher markdowns. The company attributed this to improvements in the supply chain and currency effects. Additionally, the group was able to reduce its operating costs.

Operating profit rose by 40 percent to 4.9 billion Swedish kronor compared to the prior-year quarter. Net profit attributable to shareholders grew by 39 percent to 3.2 billion Swedish kronor.

In the first nine months of the current financial year, group sales amounted to 169.1 billion Swedish kronor. This was 2 percent below the corresponding prior-year level, although it increased by 2 percent in local currencies. Net profit attributable to shareholders fell by almost 10 percent to 7.8 billion Swedish kronor.

No upward trend was apparent in the first few weeks of the fourth quarter. In September, according to management's current assessment, revenue in local currencies is expected to be roughly at the level of the same month last year. The company also warned that the impact on earnings from markdowns in the fourth quarter will be slightly higher than in the previous year.

This article was translated to English using an AI tool.

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